UNIT 1: INTRODUCTION
1. Micro Economics
3. Central Problems of an Economy / Basic Economic Problems
4. Causes of an Economic Problem
5. Production Possibility Curve
6. Marginal Opportunity Cost–MOC
7. Marginal Rate of Transformation
8. Opportunity Cost
1. Micro Economics: It is a study of behaviour of individual units of an economy such as individual consumer, producer etc.
2. Economy: An economy is a system by which people get their living.
3. Economic Problem: “An economic problem is basically the problem of choice” which arises due to scarcity of resources having alternative uses”.
4. Causes of Economic Problem:
5. Basic (Central) Economic Problems
(a) Allocation of resources
• What to produce?
• How to produce?
• For whom to produce
(b) Efficient Utilization of Resources
(c) Growth of resources
6. Production Possibility Curve (PPC): PP curve shows all the possible combination of two goods that can be produced with the help of available resources and technology.
7. Marginal Opportunity Cost: MOC of a particular good along PPC is the amount of other good which is sacrificed for production of additional unit of another good.
8. Marginal Rate of Transformation: MRT is the ratio of units of one good sacrificed to produce one more unit of other good.
9. Scarcity of Resources: Scarcity of resources means shortage of resources in relation to their demand.
10. Opportunity Cost: It is the cost of next best alternative foregone.